Let's start with the obvious: Fool HQ is in the zone that will be affected by Hurricane Florence after it makes landfall, and even if it weren't, we'd never downplay the human suffering inherent in such an event. But the focus of the MarketFoolery podcast -- when it's not lost in digressions -- is investing, and the question bears asking: Is there a reasonable case to be made that this storm boosts the investment thesis for any particular company?
In this segment of MarketFoolery, host Chris Hill and Motley Fool Asset Management's Bill Barker consider how that might apply to home improvement giants Home Depot (NYSE:HD) and Lowe's (NYSE:LOW), which are major players in the "repairing damaged property" business. They also consider the impact on the trucking and logistics industries.
A full transcript follows the video.
This video was recorded on Sept. 11, 2018.
Chris Hill: As you and I speak, hurricane Florence continues to barrel her way toward the Carolinas. I'm curious, because, obviously, for where we are, we're in Northern Virginia -- South Carolina, North Carolina, Virginia, and Maryland, the governors of those four states have all declared a state of emergency. It's going to be far less damaging for us where we are than it's going to be for people certainly on the Outer Banks of North Carolina, where they've already started to be evacuated. But, I'm thinking right now, primarily, of listeners who are in the 46 other states -- and, for that matter, other countries. Look, there are going to be natural disasters. There are going to be hurricanes. Florence is coming now. It's going to be another named hurricane in the future. Why not try and make a little money off of Florence? When I think about hurricane stocks, the first two to leap to mind are Home Depot and Lowe's. Those seem like the obvious choices because damage is going to be done, and stuff's got to get fixed.
Bill Barker: Yeah. I guess I would say that I don't look at this or try to address this from the perspective of, "How do I make money off of this hurricane, and hopefully what will not be a tragedy in terms of human life, but damage to property," there's enough warning that hopefully people are receiving it and getting out of the way. But the property won't get out of the way. Some of it's going to be destroyed or damaged in other ways. So, how does the American economy replace that? And who gets that opportunity?
In particular, I would say, look at it over the long-term. How do you think things are changing? If you believe that rising ocean temperatures are related to stronger hurricanes and possibly more frequent ones, then there may be a reason to take a long-term view on what is in the path of being able to serve the economy after the increasing damage that may be on the way.
To that point, Home Depot's an obvious one, and Lowe's, as well. They get a lot of the headlines at times like this. Some of the other things you can look at -- I'm looking at it in particular because we own a few logistics companies -- the freight and logistics companies that are being employed by people that have to move product, get out of the way, for one thing. You have to move product from Florida to Maine. They were going to be driving through North and South Carolina. They have a schedule, they have to do that -- well, no. They're not going to be able to do that. They're going to have to get that product to the final destination in other ways. Companies like XPO Logistics, C.H. Robinson, they're benefiting.
And then, the straight truck companies. There's a lot of increased price already. Capacity is very tight in the trucking industry. Old Dominion and J.B. Hunt. There are other companies that are making greater profits already prior to the storm off of just the increased freight prices. That's a thing to look at.
Look, freight trucking is highly cyclical. Don't put too much money in something because it has a good quarter, even if these things have a little incremental business from the disruption here. Recall that they're highly cyclical industries.